Obsidian Energy Announces 2026 Guidance and Provides an Operational Update

Core Viewpoint - Obsidian Energy Ltd. has announced its 2026 capital plan and operational updates, focusing on the development of light and heavy oil assets, while maintaining a disciplined approach to capital expenditures amid commodity price volatility [1][2]. Capital Expenditure and Production Guidance - The 2026 capital budget is set between $190 million and $230 million, with average production guidance of 27,900 to 29,900 barrels of oil equivalent per day (boe/d), of which 73% is liquids [3][9]. - Capital expenditures are allocated as follows: $128 million for Willesden Green/Pembina Cardium Unit 11 and $80 million for heavy oil assets in Peace River, including $22 million for waterflood initiatives [3][5]. Pricing Assumptions and Financial Projections - The company assumes WTI prices of US$58.00 per barrel for the first half of 2026 and US$62.00 per barrel for the second half, with AECO natural gas priced at $2.75 per gigajoule [4][12]. - Based on these pricing levels, Obsidian anticipates generating approximately $225 million in funds flow from operations (FFO) and about $7 million in positive free cash flow (FCF) [4][9]. Operational Strategy and Development Plans - The development activities for 2026 will focus on both the Bluesky and Clearwater formations, with plans to drill 8 Clearwater waterflood injection wells and prioritize Clearwater injector projects in the first half of the year [6][10]. - In light oil, the company will continue development in Open Creek and Crimson areas, particularly in the Belly River formation, benefiting from new infrastructure completed in late 2025 [7][22]. Production and Cost Management - The production guidance for heavy oil is set at 12,700 boe/d, with 93% being oil and natural gas liquids, while light oil production is expected to average 16,200 boe/d, with 58% being oil and natural gas liquids [12][24]. - Net operating costs are projected to average between $14.00 and $15.00 per boe, with a focus on cost reduction initiatives across the portfolio [4][9]. Waterflood Initiatives and Infrastructure Development - The company plans to allocate $22 million for waterflood initiatives in Peace River, with expectations that these efforts will support approximately 35% of Clearwater production by the end of 2026 [10][19]. - The completion of the Open Creek infrastructure project is expected to enhance production capacity and efficiency in the Belly River and Cardium plays [22][19].